Horwath’s proposal will lead to higher prices at the pump

Sunday, May 20, 2018

OTTAWA – Today reporters criticized Andrea Horwath’s promise to regulate gas prices as “vague." They weren’t the first to criticize this idea which has led to higher prices in provinces where her promise has been implemented.

The late Jack Layton also looked at a similar proposal to Horwath, and concluded that the Ontario Liberal approach of empowering a “watchdog” made more sense:

The Nova Scotia government began regulating gas prices in 2006 under pressure from the provincial NDP, when it was in opposition, and Layton said his party has discussed it before and remains open to the idea.

Regulation of gasoline prices was something Horwath herself has both promoted and opposed, having run on it in 2011 and then dropping it from her 2014 platform:

“Gone, too, are other interventionist proposals from 2011. The new platform has dropped plans to set gasoline prices." (Toronto Star, May 23, 2014)

While Horwath was intentionally “vague” this morning, her platform does draw a direct link to Bill 183 introduced by NDP candidate Gilles Bisson, to empower the Ontario Energy Board to set a maximum weekly price.

It is important to note the regulators themselves, the Ontario Energy Board and Natural Resources Canada, have not just said this does not lead to lower prices, it may actual lead to Ontarians paying more at the pumps.

“While some provinces have opted to regulate gasoline and other fuel prices, this approach has not resulted in lowered prices for consumers in these jurisdictions.” – Natural Resources Canada

“Our analysis demonstrates that regulation can affect fuel prices by altering the competitive dynamics of a market and its prices in ways that may not necessarily benefit consumers. In some provinces, regulations have resulted in prices that were higher (though less volatile) than would likely be experienced in an unregulated setting… In Newfoundland, there is evidence that retailers used the weekly setting of the regulated maximum as a price signal, often deviating from a lower market derived price, to a higher statutory price in coordination with their regulation’s administrative cycle. It is likely that if regulated maximum prices did not exist in Newfoundland, pump prices would not have behaved in this manner. This has likely contributed to retail margins that are among the highest in the country. – Report commissioned by the Ontario Energy Board

A review of gasoline prices since Newfoundland implemented weekly gasoline price regulation – similar to the one promised today by Andrea Horwath – has resulted in consistently higher gasoline prices than Ontario, regardless if they are rising or falling.